13 Minute Read

Friday Feature – Strength in Sectors

May 21, 2021

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Back up! back up!

Happy Friday Traders,

Ever been minding your business then all of a sudden a situation occurs and you enter into panic mode because you thought it involved you or a loved one only to let out a huge sign of relief cause, after all, it didn’t? That’s what Wednesday’s morning sell-off felt like with news from China banning payment institutions from cryptocurrency transactions. The crypto market went on a free fall and cryptos said to the rest of the market, “if I’m going down you’re coming with me”, creating a frenzy overnight into the morning session only for it to recover in the afternoon session and follow through on Thursday. Not knowing that the recovery was just a few hours away, one might have easily hit the panic button pre-maturely and gotten out of bullish trades or entered bearish ones which is why waiting to see how the rest of the day plays out is key and allowing your stops to take you out rather than exiting trades too early.

I enjoy a good laugh and 90’s sitcoms have provided plenty of laughs over the years Fresh Prince being one of them. One of my many favorite episodes is when Will is teaching Ashley how to deal with a bully from school using the full-scale psychological warfare approach and “Back up, back up! Mind ya business, that’s all, mind ya business”  saying lives on.

Even though the majority of stocks started in the red on Wednesday’s session, some stocks stood their ground and went for the Will Smith approach telling the market to leave it alone and mind its business.

One of those stocks being LLY but let’s first start with XLV before I share my thoughts on LLY. The healthcare sector has had a good run but it too got caught up in the volatility of this week and last week ultimately killing was a pretty nice breakout to all-time highs. The pullback had XLV closing below the 9 and 20 day moving averages both times followed by an instant bounce back. With Thursday’s strong close, XLV is setting up for another breakout which could potentially get the ball rolling on some stocks in that sector that have been on the sidelines for a bit.

Unlike XLV which has been on a long-term uptrend, LLY for months was channeling between the 180/195 support and resistance levels.  It broke out of that channel and has been hanging at the new support which was old resistance. As the sector got beat up just a little bit by the market, LLY held its own and never violated the 20 let alone 9-day moving average on the same days XLV did. This makes me like it even more because if we see XLV push for new highs, LLY could follow suit and make a run to its old highs of 210/220. I love the cleanliness of this chart. It’s not messy. You can easily identify support at 195, trigger if you missed the first one, is above a significant whole number at 200, and a target of 210/220. Clean and simple. Oh, and notice the increase in volume on LLY as it starts to distance itself from that support zone. Now it is just a matter of deciding how to play it. Stock or option, delta or theta, position size accordingly then wait. The market will do what the market will do. Our job regardless is to look for opportunity. Whether the market is up, down or sideways there is always a trade that can be made just make sure it’s one that can fight or pretend to fight like Will and Ashley.

Ladies, tonight is our monthly Women In Trading webinar don’t miss it! See you are 8:30pm est.

Until next time,

Coach Em!

Coach Em

Emily Muiruri

Emily Muiruri

Emily Muiruri was born and raised in Nairobi, Kenya before her family moved to the US and settled in Maryland, Emily began her trading journey in January 2015 after 17 years of Property Management in the Self-Storage Industry. Like many new traders, Emily started off with directional trading strategies such as long calls, long puts and very little in cash flow strategies. Over time that has changed and now her core trading strategies are cash flow based such as are Covered Calls, Naked Puts, and Iron Condors. Though she is still a student learning and enhancing her trading skills, she has a strong desire to teach women to take control of their finances and become traders. Writing blogs is one of the ways she’s is looking to spread the word and get more women involved. Emily knows that with the right education and trading system women can be successful traders.

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